ML22347A251

Fiscal Year 2023 Regulatory Flexibility Analysis

ML22347A251
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Issue date:	01/30/2023
From:	NRC/OCFO
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Download: ML22347A251 (8)

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REGULATORY FLEXIBILITY ANALYSIS The Regulatory Flexibility Act (RFA), as amended at 5 U.S.C. 601 et seq., requires that agencies consider the impact of their rulemakings on small entities and, consistent with applicable statutes, consider alternatives to minimize these impacts on the businesses, organizations, and government jurisdictions to which they apply.

The U.S. Nuclear Regulatory Commission (NRC) has established standards for determining which NRC licensees qualify as small entities pursuant to Title 10 of the Code of Federal Regulations (10 CFR) 2.810, NRC size standards. These standards are based on the Small Business Administrations (SBA) most common receipts-based size standards and provides for business concerns that are manufacturing entities. The NRC uses the size standards to reduce the impact of annual fees on small entities by establishing a licensees eligibility to qualify for a maximum small entity fee. The small entity fee categories in

§ 171.16(c), Annual fees: Materials licensees, holders of certificates of compliance, holders of sealed source and device registrations, holders of quality assurance program approvals, and government agencies licensed by the NRC, of this final rule are based on the NRC's size standards.

The NRC is required each year, under Nuclear Energy Innovation and Modernization Act (NEIMA), to recover, to the maximum extent practicable, approximately 100 percent of its total budget authority for the fiscal year, less the budget authority for excluded activities. NEIMA requires that the schedule of charges established by rulemaking should fairly and equitably allocate the total amount to be recovered from the NRCs licensees based on the principle that licensees who require the greatest utilization of agency resources pay the greatest annual charges. Since fiscal year (FY) 1991, the NRC has complied with the law by issuing a final rule that amends its fee regulations. These final rules have established the methodology used by the NRC in identifying and determining the fees to be assessed and collected in any given FY.

The NRC is rebaselining its 10 CFR Part 171 annual fees in FY 2023. Compared to FY 2022, the NRC is proposing to decrease annual fees for the U.S. Department of Energy (DOE) Uranium Mill Tailings Radiation Control Act Program, one fuel facilities fee category, and 10 materials users fee categories. The proposed annual fees are increasing for operating power reactors, most fuel facilities, spent fuel storage/reactor decommissioning activities, non-power production or utilization facilities, DOE transportation activities, the non-DOE uranium recovery licensee, and 47 materials users fee categories.

The Small Business Regulatory Enforcement Fairness Act (SBREFA) provides Congress with the opportunity to review agency rules before they go into effect. Under this legislation, the NRCs annual fee rule is considered a "major" rule and must be reviewed by Congress and the Comptroller General before the rule becomes effective.

The SBREFA also requires that the NRC prepare a written compliance guide to assist small entities in complying with each rule for which a regulatory flexibility analysis is prepared.

As required by law, this guide was prepared for the FY 2023 fee rule. The small entity compliance guide is publicly available in the NRCs Agencywide Documents Access and Management System (ADAMS) at ML22347A247. For the FY 2023 proposed fee rule, a biennial review of fees was performed. Accordingly, the small entity fees increase to $5,200 for the upper-tier fee and remain at $1,000 for the lower-tier fee. The next regulatory flexibility analysis will be performed during the next small entity biennial review scheduled for FY 2025.

I. Impact on Small Entities.

The NRCs fee rule will result in fees charged to those individuals, organizations, and companies licensed by the NRC, including those licensed under the NRC materials program.

The comments received in response to previous proposed fee rules and the small entity certifications indicate that licensees qualifying as small entities under the NRC's size standards are primarily materials licensees. Therefore, this analysis will focus on the economic impact of 2

fees on materials licensees. In FY 2022, approximately 732, or 30 percent, of all licenses under the materials program (approximately 2,423 total program licenses) were held by licensees qualifying as small entities.

To reduce the significance of the annual fees on a substantial number of small entities, the NRC established the maximum small entity fee in FY 1991. In FY 1992, the NRC introduced a second lower tier to the small entity fee. Because the NRCs methodology for small entity size standards has been approved by the Small Business Administration, the NRC did not modify its current methodology for this rulemaking.

The NRC published a final rule amending the small business size standards (87 FR 8943; February 17, 2022). In the final rule, the NRC increased the receipts-based small entity size standards from $7.0 million to $8.0 million for small businesses and small, not-for-profit organizations. In addition, the NRC also amended the average gross-receipts calculation process to change from a 3-year averaging period to a 5-year averaging period, as required by SBA regulations and in response to the Small Business Runway Extension Act of 2018. Further, and analogous to the inflation adjustment in 10 CFR 2.810, the NRC amended 10 CFR 171.16(c), Annual fees: Materials licensees, holders of certificates of compliance, holders of sealed source and device registrations, holders of quality assurance program approvals, and government agencies licensed by the NRC, to increase the upper-tier receipts-based small entity size standard from $7.0 million to $8.0 million for small businesses and small, not-for-profit organizations. Likewise, the NRC increased the lower-tier receipts-based size standard from $485,000 to $555,000 based upon the percent change in the upper tier.

Commenters on previous fee rulemakings have consistently indicated that the following would occur if the proposed annual fees were not modified:

1. Large firms would gain an unfair competitive advantage over small entities.

Commenters noted that small and very small companies ("Mom and Pop" operations) would find it more difficult to absorb the annual fee than a large corporation or a high-volume 3

type of operation. In competitive markets, such as soil testing, annual fees would put small licensees at an extreme competitive disadvantage with their much larger competitors because the proposed fees would be identical for both small and large firms.

2. Some firms would be forced to cancel their licenses. A licensee with receipts of less than $500,000 per year stated that the proposed rule would, in effect, force it to relinquish its soil density gauge and license, thereby reducing its ability to do its work effectively. Other licensees, especially well-loggers, noted that the increased fees would force small businesses to abandon the materials license altogether. Commenters estimated that the proposed rule would cause roughly 10 percent of the well-logging licensees to terminate their licenses immediately and approximately 25 percent to terminate before the next annual assessment.

3. Some companies would go out of business.

4. Some companies would have budget problems. Many medical licensees noted that, along with reduced reimbursements, the proposed increase of the existing fees and the introduction of additional fees would significantly affect their budgets. Others noted that, in view of the cuts by Medicare and other third-party carriers, the fees would produce a hardship difficult for some facilities to meet.

Many requests to terminate licenses, approvals, or registration terminations have been received since the NRC first established annual fees for materials licenses. Although some terminations were requested because the license was no longer needed or could be combined with registrations, indications are that the economic impact of the fees caused other terminations.

To alleviate the significant impact of the annual fees on a substantial number of small entities, the NRC considered the following alternatives in accordance with the RFA in developing each of its fee rules since FY 1991:

1. Basing fees on the amount of radioactivity possessed by the licensee (e.g., number of sources).

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2. Basing fees on the frequency of use of licensed radioactive material (e.g., volume of patients).

3. Basing fees on the NRC size standards for small entities.

The NRC has reexamined its previous evaluations of these alternatives and continues to believe that a maximum fee for small entities is the most appropriate and effective option for reducing the impact of fees on small entities.

II. Maximum Fee.

The SBREFA and its implementing guidance do not provide specific guidelines on what constitutes a significant economic impact on a small entity. Historically, in developing the maximum small entity annual fee, the NRC has examined 10 CFR Part 170 licensing and inspection fees and Agreement State fees for fee categories which were expected to have a substantial number of small entities. In 1991, six Agreement States (Washington, Texas, Illinois, Nebraska, New York, and Utah) were used as benchmarks in establishing the maximum small entity annual fee.

Since that time, the NRC conducted an in-depth biennial review of the FY 2009 small entity fees. The review noted significant changes between FY 2000 and FY 2008 in both the external and internal environment which impacted fees for NRCs materials users licensees.

Based on that review, the NRC changed the methodology for reviewing small entity fees. As stated in SECY-08-0174, Fiscal Year 2009 Proposed Fee Rule and Advance Rulemaking for Grid-Appropriate Reactor Fees, dated November 7, 2008, (ML083120518), the NRC determined that the maximum small entity fee should be adjusted each biennial year using a fixed percentage of 39 percent applied to the prior 2-year weighted average of materials users fees for all fee categories which have small entity licensees. The 39 percent was based on the small entity annual fee for 2005, which was the first year the NRC was required to recover 90 percent of its budget authority. This methodology remains in place; however, the NRC also 5

considers whether or not implementing an increase will have a disproportionate impact on the NRCs small licensees when compared to other licensees. Therefore, the increase for the upper and lower tier fees were capped at a 21 percent increase.

For the FY 2023 proposed fee rule, the NRC staff performed a biennial review using the fee methodology developed in FY 2009 that applies a fixed percentage of 39-percent to the prior 2-year weighted average of materials users fees. Based on this methodology, the upper tier small entity fee increased from $4,900 to $5,200 and the lower-tier fee remained the same at

$1,000. This constitutes an increase of approximately 6 percent for the upper tier. Implementing this increase results in a proportionate impact upon the NRCs small licensees compared to other licensees. Therefore, for FY 2023, the increase for the upper and lower tier fees were not subject to the 21 percent capped increase. The NRC staff will perform a biennial review again for the FY 2025 fee rule.

III. Summary.

The NRC has determined that the 10 CFR Part 171 proposed annual fees significantly impact a substantial number of small entities. A maximum fee for small entities strikes a balance between the requirement to recover, to the maximum extent practicable, approximately 100 percent of the NRCs budget authority, less the budget authority for excluded activities, and the requirement to consider means of reducing the impact of the fee on small entities. Based on its regulatory flexibility analysis, the NRC concludes that a maximum upper-tier annual fee of

$5,200 for small businesses with gross average receipts of $555,000 to $8.0 million; small not-for-profit organizations with gross annual receipts of $555,000 to $8.0 million; small governmental jurisdictions with a population of 20,000 to 49,999; small manufacturing entities that have 35 to 500 employees; and educational institutions that are not State or publicly supported and have 35 to 500 employees reduces the impact on small entities. The NRC also concludes that a lower-tier annual fee of $1,000 for small businesses with gross average 6

receipts of less than $555,000; small not-for-profit organizations with gross annual receipts less than $555,000; small governmental jurisdictions with a population fewer than 20,000; small manufacturing entities that have fewer 35 employees; and educational institutions that are not State or publicly supported and have fewer than 35 employees, reduces the impact on small entities. At the same time, these reduced annual fees are consistent with the objectives of NEIMA. Thus, the fees for small entities maintain a balance between the objectives of NEIMA and the RFA.

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SUBJECT:

FISCAL YEAR 2023 REGULATORY FLEXIBILITY ANALYSIS, DATED:

JANUARY 30, 2023 DISTRIBUTION:

OCFO/DOB R/F Public ADAMS Accession Number: ML22347A251 OFFICE OCFO/DOB OCFO/DOB OCFO/DOB OCFO/DOC NAME JJacobs WBlaney CGalster MBlair DATE 01/20/2023 01/20/2023 01/20/2023 01/20/2023 OFFICE OCFO/DOB OCFO/DOB OCFO/DOB NAME ARossi RAllwein JEShay DATE 01/23/2023 01/24/2023 01/30/2023 OFFICIAL RECORD COPY